Kenya’s National Treasury has submitted a bill to the National Assembly to regulate the operations of virtual asset service providers in the country.
Among other provisions, the bill is seeking for VASPs in the country to secure operating licenses in accordance with Kenyan laws.
Dive deeper
- The Virtual Assets Service Providers Bill 2025 was brought before Kenyan legislators on April 4.
- According to the document’s provisions, the Kenyan National Treasury wants VASPs to be brought under the regulatory purview of the Kenyan Capital Markets Association and the Central Bank of Kenya.
- The VASP Bill 2025 proposes that licensed exchanges must open physical offices in the country and put anti-money laundering/combating the financing of terrorism (AML/CFT) measures in place.
- This implies that these crypto firms must collect information on users who transact on their platforms and share it with relevant government agencies.
- Under the new legal regime, only licensed entities can issue initial coin offerings (ICOs) and only after they have secured regulatory approval.
Key context
- Kenya is now walking back on its disposition towards digital assets after it had initially put in place a soft ban in 2015 and warned financial institutions to steer clear of cryptocurrencies.
- A flurry of crypto activity in the country in recent years, including the launch of the controversial decentralized ID protocol Worldcoin and scams such as the Argo and BTCM schemes, meant the government could no longer turn its back on crypto.
- In 2023, the Kenyan government introduced a contentious 3% digital asset tax (DAT) as part of its amended Finance Act.
- While the tax regime offered little by way of regulation, it signified that digital assets now have legal recognition in the country.
Before now
- Following the uproar that greeted DAT’s introduction, the Kenyan government began talks with stakeholders in the Kenyan crypto industry towards the establishment of actual crypto regulations.
- In December 2024, the Kenyan National Treasury released draft guidelines for VASPs in the country and called for public input on the imminent crypto regulations.
- Weeks later, a Kenyan-based blockchain advocacy group, the Virtual Assets Chamber of Commerce (VACC) said it had submitted policy recommendations to the technical committee on crypto regulations.
- It asked the Kenyan legislators to reverse the DAT which it described as stifling and exceeding the global average.
- It also asked for the introduction of a Kenyan shilling-pegged local stablecoin to reduce the reliance on the United States dollar.
Zoom out
- Kenya is the latest African country to introduce a licensing program for VASPs to become operational legally within its borders.
- While South Africa is the most advanced in this process having issued more than 240 licenses, Nigeria is not far behind, opening a sandbox for VASPs and issuing provisional licenses to two firms last year.
- Other countries, such as Morocco and Ghana, are still in the process of creating legal rules to guide crypto usage.
